Takeaway from The NewBiznews Conference – Understanding New Business Models

Panelist: Jennifer McFadden (Business Analyst, New Business Models for News Project)

Jean-Francois Mignon & Nancy Wang (Mignon Media)

Mignon Media created a spreadsheet incorporating two new business model for hyperlocal and the sales, support, and technology framework that we believe is necessary to optimize businesses in the ecosystem. The framework is based on a sample division of  a metro market of 5 million people into many smaller markets (20k, 35k, and 60k) to reflect the towns and neighborhoods that comprise a large metropolitan market.

They also have non-for-profit organization’s business model and paid-content model, included in its new news organization model, envisioning a new, metro-wide news organization serving a market of five million people that operates on a smaller scale and performs a wide variety of tasks.

As they have presented the core idea and major numbers in the morning section, in the afternoon’s panel, Jennifer and Nancy used most of the time to answer questions. Here is an except from the Q&A section:

No matter it’s the NGO or paid-content model, or general news hyper local organization, the income statement and ad revenue would follow the metro sample organization. For paid content model, even in the best case scenario (based on Mignon Media’s clients), 2% of the website’s unique visitors become subscribers, paying $8.5 monthly subscription fee for half of average at a 50,000 circulation paper. Averagely, only 1% of unique visitors are willing to pay for subscription for general news content with $ 4.25 monthly fee, except a 30% subscriber churn outlook. For finance news organization (Mignon’s client based in Canada), the percentage is higher, but all subscription are paid by financial institutions, not by individuals.  The b2b model cannot copy to other kinds of news organizations as majorly corporation paid for the content

However, the acquisition cost for subscriptions equals at $45. In that case, for a sample metro market of 5 million people, subscription only stands as a quarter of the total revenue as advertising contributes for the rest.

One more thing to think about free content vs superscription is a mix of what those sites are charging, we have to keep in mind of the cost for paid-content loyalty, which means more cost to maintain the loyalty of subscribers, but also they paid more serious attention to the content, and even to the web commercials.

TALES OF THE TAPE: New Oriental’s Outlook Healthy,Despite Flu

By Kate Zhao
   Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)–Swine flu fears kept students from enrolling in New Oriental Education & Technology Group’s (EDU) summer classes, hurting quarterly results, but long-term growth prospects are intact as the company benefits from enthusiasm for learning English in China.

New Oriental, which offers language classes for children and adults, saw record cancellations and deferments for summer classes because students and parents were concerned about H1N1, commonly called swine flu. Revenue increased 26% when analysts were expecting 31% growth.

As a result, the company’s American Depositary Shares are down 11% since its fiscal first-quarter earnings report last week. However, the swine flu effect is expected to be temporary and New Oriental’s earnings per share are expected to grow 40% this fiscal year, according to Thomson Reuters.

“The swine flu is like any other natural disaster. It may last a quarter or two, and then it goes away,” said Brandon Dobell, an analyst with William Blair & Co. He added that this was the first time the company missed expectations in two years, and that’s what hit the share price.

The company expects flu fears to continue to hurt enrollment during the current quarter.

“The adverse effects on our business from the fear of H1N1 will gradually subside as the H1N1 flu vaccine has been made available in China this month,” said Minhong Yu, New Oriental’s founder and chairman.

New Oriental ADSs closed Friday at $72.33. The ADSs are up 32% this year, compared with a 20% gain in the S&P 500.

The English-language training market in China was valued around $1.9 billion in 2004 and is expected to double in 2010, said Robert W. Baird & Co.’s analyst Amy Junker.

William Blair’s Dobell said, “Parents still want to send their kids to learn English as early as possible and kids still need to take tests to get into elementary schools, middle schools and colleges.”

New Oriental began it operations helping college students prepare for overseas language tests in 1993 and has expanded into broad English education.

The company now has 287 learning centers, expanding beyond major cities, and is the largest provider of private English education in China, based on number of programs, student enrollment and geographic scope. As far away as Anshan, a small town hundreds of miles north of Beijing, New Oriental opened an English-learning center last year where parents are willing to spend hours waiting in line to get their children into the program.

New Oriental’s success has prompted competition in the market, with Global IELTS Group and NeWorld Education Group both gaining private-equity financing. Neither company is traded in the U.S.

NeWorld specializes in Japanese training. New Oriental offers Japanese and other languages but says English is its most popular program.

For the quarter ending Aug. 31, New Oriental reported net income of $57.1 million, up 27% from a year earlier, on revenue of $149.4 million.

 

-By Kate Zhao, Dow Jones Newswires; 212-416-2665; ying.zhao@dowjones.com

Acuity Brands Shares Rise Before 4Q Report; Stimulus To Help

By Kate Zhao
   Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)–Shares of Acuity Brands Inc. (AYI) jumped more than 6% Tuesday, a day ahead of its fiscal fourth-quarter results, as analysts weighed the potential for the lighting-fixtures manufacturer to see improving market conditions driven by the U.S. stimulus plan.

Acuity and rivals have been positioning their lighting and control portfolios for energy efficiencies while cutting costs, including layoffs, in response. The U.S. stimulus package may give the sector a boost late this year, while broader pending energy legislation could provide a long-term catalyst.

Wedbush Morgan Securities analyst Craig Irwin said as the largest lighting fixtures manufacturer in the U.S., Acuity will become one of the biggest winners of the market opportunity in stimulus-plan funded projects.

“There is probably a couple of hundred of million dollars for lighting there, and Acuity can capture a share of that,” he said.

Irwin also added that in Wednesday’s conference call, there is a good possibility the company will detail how much it expects to receive from the stimulus plan.

The U.S. Department of Energy has disbursed $1.4 billion this year to 1,200 projects under the first round of energy-efficiency block grants from the stimulus plan, under which there is $66 billion available in funding for construction and energy efficiency projects.

“The disbursement was the first tranche of energy efficiency funding we expected to materialize in the end markets,” said Irwin, who added the question remains when the full effect of the stimulus plan will be felt.

Acuity shares closed up 3.4% to $32.49 after earlier soaring as high as $33.39 amid a broad market rally.

Although the benefits won’t show significantly in Acuity Brands’ fiscal fourth quarter ended Aug. 31, Irwin expects to see a stronger return in sales both in the company and in the lighting fixture sector in 2010.

Building completions remain as a major driver of lighting fixtures demands, but Irwin said he remained conservative in both the company and the sector because lighting usually lags in a recovery.

For the fourth quarter, analysts surveyed by Thomson Reuters expect per-share earnings to tumble 44% to 57 cents and revenue to drop 23% to $405 million.

-By Kate Zhao, Dow Jones Newswire; 212-416-2665; ying.zhao@dowjones.com